In The News

What about a "Stock and Bill" Set-up?

By Deborah Conn

A particularly contentious topic is the so-called 'stock and bill' arrangement, also known as a consignment closet. This arrangement between a physician and a supplier, either a manufacturer or an O&P facility, can take several forms. One of the most common is for the physician to store off-the-shelf devices in the office. When a patient needs a brace, it will be fitted in the office by the physician, an orthotic fitter, an orthopedic tech, or a manufacturer's representative. The physician notifies the supplier or O&P facility, which bills for the device.

According to Kathy Dodson, AOPA's senior director of government affairs, these arrangements are fraught with problems (see Consignment Closets: Are They Legal O&P Almanac, January 2006). Medicare has not come out and said this is illegal, but the OIG [Office of the Inspector General] has listed it as a risk area,' she says.

One of the problems is that a stock-and-bill setup creates a climate ripe for abuse. Suppliers may rent space from the physician to store their devices. If so, Dodson said, it has to be fair market value for the space used. They can't pay $10,000 for two feet of shelving.

And according to Sansone, some suppliers have been known to give physicians free products, calling it shrinkage.' He bluntly calls it inducement.

But even when there is no financial reward, says Dodson, there's always the appearance that the O&P facility or manufacturer's representative is doing a favor for the doctor. Maybe that doctor is giving all referrals back to that supplier. This may or may not be going on, but it is a gray area.

Dodson has a personal concern as well. When the facility or representative bills Medicare, they are representing that they have provided treatment and follow-up on that patient, when they have never even seen the patient. This is too close to false billing for my comfort level, even if Medicare hasn't prohibited it.

Joe Sansone of TMC Orthopedic has more than 90 stock-and-bill programs in the Houston area. He believes that consignment closets can be established within the confines of federal regulations as long as you take precautions, and he advises working with a knowledgeable healthcare attorney when setting up such arrangements.

He said, I just don't pay rent. I never give anything away for free. I never give advice or free consultation. And I avoid the increasingly popular programs wherein stock-and-bill arrangements are bundled with other creative programs, such as teaching the doctor how to bill, billing directly for the physician and/or collecting a percentage.

Many dissenters feel that patient care is sacrificed with stock-and-bill programs, but we have delivered over 50,000 products throughout the years, and we have yet to hear from one doctor or one patient about a bad outcome.

Deborah Conn is a freelance writer based in Falls Chuch, Va.